Nurture Your Employees' Side Projects

Jessica Stillman is a freelance writer based in Cyprus with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist.

Last week, we highlighted a post by an expert on Gen Y who advised business owners to consider hiring candidates that aspire to become entrepreneurs themselves. Some were skeptical that employees with entrepreneurial ambitions could flourish as employees. But one company is so gung-ho on the idea of in-house entrepreneurs it's actually going a step further: assisting existing employees to do their own start-ups on the side.

Digital agency Rockfish, which is based in Arkansas, got its start doing mobile campaigns for Walmart and Sam's Club. Now it has been acquired by WPP, but remains an independent entity. It's expanded to Dallas and Cincinnati, growing to nearly 200 heads. How does it attract, motivate, and retain the technical and creative talent it needs?

According to Laura Gardner, the company's marketing and PR manager, that success can be attributed in part to Rockfish's policy of encouraging team members to start their own businesses on the side.

Nurturing Creativity In-House...

Aside from an arm of the business that invests in start-ups relevant to clients' needs, which we've covered here on Inc.com before, Rockfish also runs two internal programs focused on exercising employees' entrepreneurial muscles. The first of these, called Rockfish Labs, is essentially a program to turn ideas generated by the company's client work into new businesses in-house.

Gardner offers digital couponing platform CouponFactory as an example. "Everyone is getting into digital couponing, and we were hearing from different clients that there just wasn't their solution that they were looking for, so Rockfish started thinking of ways that they could solve that. It became apparent that should be our next company. They started building the platform," she says.

"We'll end up launching it and it's ultimately owned by Rockfish. Everyone in Rockfish owns a part of CouponFactory, so if CouponFactory was to sell to, say, Google, that would come back to Rockfish and all the employees that were there during that time," explains Gardener. "That makes people really interested in working for those things to see them come to fruition and be really successful."

"Everyone also has a stake in YouEarnedIt. Say that sells for however many thousands or millions of dollars, that always comes back to Rockfish and the employees," she says.

...And During Off-Hours

The other program is dubbed Rockfish Next and it supports employees who have the ideas and ambition to get a side project off the ground in their off-hours rather than on the company's time.

"Essentially it's a start-up accelerator within Rockfish," says Gardner. "At Rockfish if you have a great idea and you still want to work at Rockfish, you can pitch it to our leadership team. It has to be four people on a team. If they believe in your idea, you have to do it off of Rockfish time because client work obviously has to come first, but you essentially get accounting, legal, network, mentors, office equipment, all these resources of Rockfish to launch your own start-up."

How about ownership--how are the fruits of these labors distributed?

"Forty percent is owned by the founding team, 15% is set aside for options, 15% is allocated to all the Rockfish employees and then 30% is owned by Rockfish," says Gardner.

Do the math, and that leaves each founder with just a 10% stake in his or her company. But the arrangement does provide training wheels for budding entrepreneurs, allowing them to learn the ins and outs of being a founder without risking penury or unemployment. And a handful of employees seem to be going for it. "One that's in the works is around pets," Gardner says mysteriously of the Rockfish Next projects. Another is "a Pinterest-related project that's expected to launch in the next few weeks."

Besides sizeable stakes in employees' baby companies, Rockfish gets solutions for pressing client issues out of the arrangement. And Gardner also believes the initiatives help with recruiting and affects employee engagement and morale. "Our culture is totally aligned with the type of people that we want to hire and we attract the best talent in our regions because of it," she says. "It's great for Rockfish because it invigorates employees who have an entrepreneurial side and also potentially provides us with potential additional revenue."

Should more companies think about actively encouraging employees entrepreneurial efforts?